IBT Exam - Hastings College of the Law

Exam # 

Return Exam and Answer 

to Student X 

UNIVERSITY OF CALIFORNIA 

HASTINGS COLLEGE OF THE LAW 

FINAL EXAMINATION 

INTERNATIONAL BUSINESS TRANSACTIONS 

(COURSE # 41611) 

PROFESSOR WILLIAM S. DODGE 

* * * * * 

FALL SEMESTER 2005 

THURSDAY, DECEMBER 8, 2005 

TIME: TWO AND ONE-HALF (2-2) HOURS 

* * * * * 

OPEN BOOK EXAMINATION 

(Instructions on Next Page) 

Page 1 of 8 Pages

Final Examination Exam # 

International Business Transactions Return Exam and Answer 

Professor Dodge to Student X 

INSTRUCTIONS 

1. This is an open book examination. You may consult the course 

book, supplemental materials, your notes, and any other 

materials you wish. You should bring with you the course 

book and supplemental materials because one or more of the 

questions may require you to refer to them. 

2. The allotted time for the examination is two and a half 

hours. There are four questions. Question one is worth 60 

points; question two is worth 30 points; question three is 

worth 30 points; and question four is worth 30 points. I 

recommend that you spend one hour on question one and 30 

minutes on each of the other questions. 

3. Read each question carefully, including the instructions 

contained in the question. Within the limits of those 

instructions, please discuss each issue reasonably raised by 

the facts, including issues that might be rendered moot by 

your resolution of another issue. 

4. Think about and organize your answers before starting to 

write. 

5. Please write as neatly as you can. 

Good luck! 

(Examination Begins on Next Page) 





QUESTION ONE 

(60 points) 

My-Pod, Inc., is a Delaware corporation with its principal 

place of business in Cupertino, California. My-Pod makes personal 

music players that can hold up to 10,000 songs, which it 

currently markets in the United States and the European Union. 

My-Pod holds product and process patents for the player in the 

United States, as well as U.S. trademark rights for the name “My- 

Pod.” It holds similar rights in the European Union. 

My-Pod is interested in penetrating the Latin American 

market for personal music players, and has entered negotiations 

for a licensing agreement with Mi-Musica, S.A., a Guatadoran 

corporation with its principal place of business in Estancia, 

Guatador. Guatador is a member of the Andean Community, and My- 

Pod is hoping that Mi-Musica will be able to market the My-Pod 

players it manufactures not only in Guatador and other Andean 

Community countries, but throughout Latin America. However, My- 

Pod is also concerned that parallel imports of Guatadoran-made 

players might undercut its sales in the United States and the 

European Union. 

My-Pod’s general counsel, Peggy Poddle, has given you the 

following draft licensing agreement. She has asked you to suggest 

changes and additions to ensure compliance with Andean Community 

law and to protect My-Pod’s interests. She has also asked you 

whether My-Pod would be able to prevent parallel imports of 

Guatadoran-made players into the United States and the European 

Union. 

Please advise Ms. Poddle. 

LICENSE AGREEMENT 

This agreement is made this __ day of ____, 2005 

by and between My-Pod, Inc., a Delaware corporation 

having its principal place of business at Cupertino, 

California (hereinafter ALicensor@), and Mi-Musica, 

S.A., a Guatadoran corporation having its principal 

place of business at Estancia, Guatador (hereinafter 

ALicensee@). 

(Question One Continues on Next Page) 





Whereas Licensor has invented a method 

(hereinafter Athe Process@) for the manufacture of 

personal music players (hereinafter Athe Product@) and 

possesses valuable secret knowledge useful in 

performing the Process (hereinafter Athe Know-how@); 

Whereas Licensor has obtained patents for both the 

Process and the Product in the United States and in 

Guatador (hereinafter Athe Patents@); 

Whereas Licensor has obtained trademarks for the 

My-Pod name in the United States and in Guatador 

(hereinafter Athe Trademark@); 

Now therefore in consideration of the mutual 

promises contained herein, Licensor and Licensee hereby 

agree as follows: 

1. Grant. Licensor grants Licensee a license, exclusive 

of Licensor and other licensees, to practice the 

Patents and Know-how in Guatador and to sell the 

Product under the Trademark in North and South America, 

with the exception of the United States and Canada 

(hereinafter “the Territory”). Licensee shall not sell 

the Product outside the Territory. 

2. Improvements. During the term of this Agreement, 

Licensor shall make available to Licensee any 

improvement related to the Process or Product, which 

Licensor has acquired, at no cost to Licensee. 

Licensee shall assign to Licensor the entire right to 

any improvement related to the Process or Product, 

which Licensee has developed, at no cost to Licensor. 

3. Trademark. Licensee shall ensure that the Trademark 

is affixed to the Products it manufactures and sells 

under this Agreement. 

4. Royalty. Licensee shall pay Licensor a royalty of 

33% of Licensee=s net profits from sales of the 

Products in the Territory. Irrespective of the sales 

achieved in any given year, Licensee shall pay Licensor 

U.S.$25,000 upon each anniversary of the date of this 

Agreement. 

(Question One Continues on Next Page) 





5. Term and Termination. This agreement shall continue 

until the expiration of Licensor=s Patents in Guatador, 

provided, however, that either party may terminate this 

agreement upon 10 days= written notice in the event 

that the other party breaches any term of this 

agreement and fails to cure such breach within 30 days 

of receipt of written notice of such breach. 

6. Arbitration. All disputes arising out of this 

agreement shall be finally decided by arbitration 

conducted in San Francisco, California pursuant to the 

International Arbitration Rules of the American 

Arbitration Association. 

7. Entire Agreement. This agreement constitutes the 

entire agreement of the parties. 

(End Question One - Question Two on Next Page) 





QUESTION TWO 

(30 points) 

Your client, a U.S. manufacturer, wishes to enter an 

agreement with an agent to sell its product in Germany, but would 

like to avoid the effect of those provisions of German law 

implementing Article 17 of the EU Council Directive on Commercial 

Agents. Please discuss and evaluate the options for your client? 

(End Question Two - Question Three on Next Page) 





QUESTION THREE 

(30 points) 

In 2001, the United States entered a Free Trade Agreement 

with the Republic of Oz. Although much of the agreement deals 

with matters of trade, Chapter 10 provides certain protections to 

foreign investors, including the following provision: 

“Article 1008. Companies of either Party shall be 

permitted to engage, within the territories of the 

other Party, accountants and other technical experts, 

executive personnel, attorneys, agents and other 

specialists of their choice.” 

Article 1001 defines “company of a Party” as “a company 

constituted or organized under the laws of a Party.” 

The Bank of Oz is a financial institution incorporated under 

Ozian law with branches throughout the United States, including a 

number in California. Recently a class action was filed against 

the Bank of Oz on behalf of its female non-managerial employees 

alleging that the Bank’s policy of hiring only male Ozian 

citizens to fill senior management positions in its California 

branches violates Title VII of the 1964 Civil Rights Act and 

California’s 2004 Citizenship Discrimination Act (“CDA”). Section 

2 of the CDA provides: 

“It shall be unlawful for any employer to fail or 

refuse to hire or to discharge any individual, or 

otherwise to discriminate against any individual with 

respect to his compensation, terms, conditions, or 

privileges of employment, because of such individual's 

citizenship.” 

The Bank has moved to dismiss both the federal and state 

claims based on Article 1008 of the Free Trade Agreement. Please 

discuss whether the motion should be granted. 

(End of Question Three C Question Four on Next Page) 





QUESTION FOUR 

(30 points) 

On September 29, 2005, Senator Inhofe introduced Senate Bill 

1797—the Foreign Investment Security Act of 2005. The Act would 

amend the Exon-Florio provision of U.S. law in five ways: 

(1) It would extend the initial period after filing notice, 

during which CFIUS makes its determination whether to investigate 

a proposed transaction, from 30 to 60 days. 

(2) It would permit the chairman and ranking member (in other 

words, the top Republican and top Democrat acting together) of 

the relevant Senate or House committee to require that CFIUS 

conduct a 45-day investigation of a proposed transaction. 

(3) It would add a new factor to be considered under § 2170(f): 

“(6) the long-term projections of United States 

requirements for sources of energy and other critical 

resources and materials for economic security.” 

(4) It would require additional reporting to Congress— 

specifically, (1) reporting the findings and recommendations of 

any CFIUS investigation to the relevant Senate and House 

committees at the same time it is reported to the President; and 

(2) quarterly reports summarizing and analyzing each transaction 

that is being reviewed, was reviewed during the past quarter, or 

is likely to be reviewed during the next quarter. It further 

provides that “[e]ach such summary and analysis shall be 

submitted in unclassified form, with classified annexes as the 

Secretary [of the Treasury] determines are required to protect 

company proprietary information and other sensitive information.” 

(5) It would allow Congress to block a transaction that the 

President had allowed to go forward by a joint resolution passed 

by both houses of Congress and signed by the President. A 

transaction the President decided not to block could not be 

consummated until 10 legislative days after the President 

notified Congress of his decision. If a joint resolution were 

introduced during that time, the transaction could not be 

consummated for an additional 30 legislative days to give each 

house of Congress an opportunity to vote on the joint resolution. 

Please evaluate the advantages and disadvantages of each of 

these proposals. 

* * * * (End of Examination) * * * *

IBT Exam - Hastings College of the Law

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